By Stephanie Carroll CarsonFlorida News Connection
TALLAHASSEE, — The Affordable Care Act has affected more than health care: it has also changed what adoptive parents can claim on their income tax returns. Parents' tax credit for adoption-related expenses has gone from being a non-refundable tax credit, to a refundable one.
Jeremy Rospierski is both a tax preparer and an adoptive parent. He says that in the past, the tax credit could only be used to offset whatever taxes were owed, with any extra rolled into the following year. But now, he says, adoptive parents will get cash back, even if they don't owe anything.
"A 'refundable credit' means that you can get the entire credit in the year that you file your Adoption Credit."
Under U.S. tax law, qualified expenses include adoption fees, court costs, attorney fees and travel expenses. Rospierski says that unused credits from the past five years can be carried forward, so parents who did not receive the full credit in the past can file amendments for adoption-related expenses going back to 2006. There's more information about the changes on the IRS.gov website.
The maximum amount adoptive parents can claim per child for 2011 is just over $13,000. Rospierski says parents who have adopted a special-needs child are eligible to claim the maximum credit. He stresses that the definition of "special needs" is broader than they might be aware, and is based on certain criteria.
"One, that a child is a U.S. citizen; the second qualification is that it's determined that the child will not return back to the parents' home - which, if you're adopted, that's going to be the case."
He says the third special needs criterion is that the state determines the child would not have been adopted unless assistance was provided, and a copy of that state determination of special needs must be filed with the tax return. While Tax Day is typically April 15, this year the deadline for filing federal tax returns is Tuesday, April 17.
Learn more about the changes at www.irs.gov.